Commission / Sales Compensation Agreement - Washington

COMMISSION / SALES COMPENSATION AGREEMENT

Washington 2027 restrictive-covenant alert: 2026 Washington Laws chapter 149 takes effect June 30, 2027. Beginning then, all worker noncompetition covenants are void regardless of signing date, and an employer may not enter, threaten, attempt to enforce, or represent that a worker is subject to one. Review customer-nonservicing and forfeiture-for-competition terms under the expanded definition. Narrow statutory exceptions remain for qualifying nonsolicitation, confidentiality/trade-secret, ≥1% ownership/goodwill-sale, and franchise covenants. Any worker noncompete below is transitional only through June 29, 2027.

RCW 49.48.150–.190 scope gate: These special commission statutes apply only when a qualifying principal uses a sales representative to solicit Washington wholesale orders for products purchased for resale. They do not cover direct-to-consumer sales or every employee commission plan. Complete the applicability election below before using any statutory 30-day term.

TABLE OF CONTENTS

1. Parties and Effective Date
2. Position and Territory
3. Commission Structure
4. Base Salary and Commission Split
5. Definition of Compensable Sale
6. Payment Timing
7. Draw Against Commission
8. Clawback and Chargeback Provisions
9. Post-Termination Commission Rights
10. Expense Reimbursement
11. Quota and Minimum Performance
12. Territory and Account Protection
13. Non-Compete Reference
14. Dispute Resolution
15. Termination Provisions
16. Washington-Specific Legal Notes
17. General Provisions
18. Signatures

1. PARTIES AND EFFECTIVE DATE

Employer / Principal: [________________________________] ("Company")
Address: [________________________________]
State of Organization: Washington

Employee / Sales Representative: [________________________________] ("Employee")
Address: [________________________________]

Effective Date: [__/__/____]

This Commission / Sales Compensation Agreement ("Agreement") is entered into by and between the Company and Employee as of the Effective Date set forth above.

2. POSITION AND TERRITORY

Job Title: [________________________________]

Reporting To: [________________________________]

Assigned Territory / Region: [________________________________]

Assigned Accounts / Verticals: [________________________________]

Employment Status:

• ☐ Full-Time Employee
• ☐ Part-Time Employee
• ☐ Qualifying wholesale sales representative under RCW 49.48.150–.190

Statutory Applicability:

☐ RCW 49.48.150–.190 applies: the Company is a statutory "principal," and the representative solicits wholesale orders for products purchased for resale.

☐ RCW 49.48.150–.190 does not apply: this is an employee, service-sales, or direct-to-consumer commission plan governed by its agreed terms and other applicable wage law.

3. COMMISSION STRUCTURE

The Employee shall be compensated under the following commission structure:

Option A — Percentage-Based Commission

Option B — Tiered Commission

Option C — Flat Fee Per Sale

Selected Structure: ☐ Option A ☐ Option B ☐ Option C

4. BASE SALARY AND COMMISSION SPLIT

Base Salary: $[________________________________] per [☐ year / ☐ month / ☐ pay period]

Compensation Model:

• ☐ Commission Only (no base salary)
• ☐ Base Salary + Commission
• ☐ Base Salary + Commission + Bonus

Target Total Compensation (estimated): $[________________________________] per year

Pay Period for Base Salary: ☐ Weekly ☐ Bi-Weekly ☐ Semi-Monthly ☐ Monthly

5. DEFINITION OF COMPENSABLE SALE

A "Sale" or "Closed Deal" for purposes of commission calculation is defined as:

[________________________________]

A commission is deemed earned when:

• ☐ The customer executes a binding purchase order or contract
• ☐ The customer makes full payment
• ☐ The product or service is delivered and accepted
• ☐ Other: [________________________________]

Excluded from commission calculation:

• ☐ Returns, cancellations, or chargebacks within [____] days
• ☐ Internal or employee sales
• ☐ Sales below $[________________________________]
• ☐ Other: [________________________________]

6. PAYMENT TIMING

Commission Payment Schedule:

• ☐ Monthly, on or before the [____] day of the following month
• ☐ Semi-monthly, in accordance with regular payroll
• ☐ Other: [________________________________]

Payment Deadline: If RCW 49.48.150–.190 applies, the Company shall pay earned commissions under the agreed contract terms, but no later than 30 days after the Company receives payment for the products or goods sold through the representative. If those sections do not apply, use the selected payroll schedule and have Washington counsel verify the deadline under the worker's classification and applicable wage law.

Commission Statements: The Company shall provide the Employee with a written commission statement on each commission payment date detailing the basis for the commission calculation.

7. DRAW AGAINST COMMISSION

Draw Applicable: ☐ Yes ☐ No

If Yes:

Draw Amount: $[________________________________] per [________________________________]

Draw Type:

• ☐ Recoverable Draw (advance against future commissions)
• ☐ Non-Recoverable Draw (guaranteed minimum)

Repayment Terms (Recoverable Draw):
[________________________________]

8. CLAWBACK AND CHARGEBACK PROVISIONS

Clawback Applicable: ☐ Yes ☐ No

Clawback Period: [____] days from date of commission payment

Triggering Events:

• ☐ Customer cancellation within [____] days of sale
• ☐ Customer non-payment or default
• ☐ Return of product within [____] days
• ☐ Other: [________________________________]

Chargeback Calculation Method:
[________________________________]

9. POST-TERMINATION COMMISSION RIGHTS

Commissions Earned Before Termination:
If RCW 49.48.150–.190 applies, all earned commissions shall be paid within 30 days after the Company receives payment for the products or goods sold through the representative, including commissions not yet due when the contract ends. Pretermination efforts that result in a later sale remain subject to the agreement's earned-commission terms and RCW 49.48.160(3)(c). If those sections do not apply, payment follows the plan's earned-commission terms and other applicable wage law.

Commissions on Pending Sales:

• ☐ Employee is entitled to commissions on deals substantially procured by Employee but closed within [____] days after termination
• ☐ Employee forfeits commissions on deals not closed before the termination date
• ☐ Pro-rated commission on deals in progress at termination
• ☐ Other: [________________________________]

10. EXPENSE REIMBURSEMENT

The Company shall reimburse Employee for the following pre-approved business expenses:

• ☐ Mileage at the IRS standard rate
• ☐ Client entertainment (pre-approved)
• ☐ Travel expenses
• ☐ Cell phone / internet
• ☐ Other: [________________________________]

Reimbursement Procedure: Expenses must be submitted within [____] days with receipts via [________________________________].

11. QUOTA AND MINIMUM PERFORMANCE

Sales Quota: $[________________________________] per [☐ month / ☐ quarter / ☐ year]

Quota Review Period: [________________________________]

Consequences of Failing to Meet Quota:

• ☐ Performance improvement plan
• ☐ Reduction in territory
• ☐ Adjustment to commission rate (prospective only)
• ☐ Termination of employment
• ☐ Other: [________________________________]

12. TERRITORY AND ACCOUNT PROTECTION

Exclusive Territory: ☐ Yes ☐ No

If Yes, the Company shall not assign another salesperson to Employee's designated territory during the term of this Agreement, except:
[________________________________]

Account Ownership Rules:
[________________________________]

Split Commission Policy (if applicable):
[________________________________]

13. NON-COMPETE REFERENCE

☐ A separate Non-Compete / Non-Solicitation Agreement is attached or incorporated by reference.

☐ A separate Confidentiality and Proprietary Information Agreement is attached or incorporated by reference.

14. DISPUTE RESOLUTION

Governing Law: This Agreement shall be governed by the laws of the State of Washington.

Venue: [________________________________] County, Washington

Dispute Resolution Method:

• ☐ Litigation in state or federal court
• ☐ Binding Arbitration under [________________________________] rules
• ☐ Mediation followed by Arbitration

15. TERMINATION PROVISIONS

Employment Relationship: Employment is at-will unless otherwise stated in a separate written agreement.

Notice of Termination:

• ☐ At-will; no notice required by either party
• ☐ [____] days' written notice required by either party

Upon Termination:

1. All earned commissions shall be paid per Section 9
2. Company property must be returned within [____] days
3. Outstanding draw balances handled per Section 7

Modification of Commission Plan:
The Company reserves the right to modify this commission plan with [____] days' written notice. Changes apply prospectively only and do not affect commissions already earned. If RCW 49.48.150–.190 applies, any modification must remain in a written contract that states how commissions are computed and paid and may not impose an out-of-state venue or payment condition contrary to RCW 49.48.160.

16. WASHINGTON-SPECIFIC LEGAL NOTES

Coverage Is Narrow: RCW 49.48.150–.190 applies to a "principal" that manufactures, produces, imports, or distributes products for resale and uses a representative to solicit wholesale orders. It excludes direct sales to ultimate consumers and does not automatically govern every employee commission plan.

Written Contract Required: For a covered wholesale relationship, RCW 49.48.160 requires a written contract stating how commissions are computed and paid, and the principal must give the representative a copy.

Default Provisions: When a covered principal and wholesale representative have no written contract, RCW 49.48.150–.190 is deemed incorporated into their agreement.

Covered Commission Definition: Within this statutory relationship, "commission" means percentage-based compensation on orders or sales of the principal's product and includes bonus payments under an incentive-compensation plan or other agreement.

Criminal Penalty for Non-Payment: Willful withholding of earned commissions may constitute a misdemeanor under RCW 49.52.050.

Double Damages: For violations of RCW 49.52.050(1) or (2), RCW 49.52.070 provides twice the wages unlawfully rebated or withheld, plus costs and reasonable attorney's fees, subject to its knowing-submission proviso.

Covered 30-Day Payment Rule: During and after a covered contract, earned commissions are due under the agreed terms but no later than 30 days after the principal receives payment for the products or goods sold through the representative. The statute does not measure the 30 days from the date the commission is earned or from termination alone.

Venue and Waiver: A covered contract may not impose out-of-state venue or payment conditions contrary to RCW 49.48.160, and the protections of RCW 49.48.150–.190 may not be waived.

Non-Compete Restrictions: RCW 49.62 restricts non-competes to employees and contractors above specified income thresholds, with a maximum presumed-reasonable duration of 18 months.

17. GENERAL PROVISIONS

Entire Agreement: This Agreement constitutes the entire agreement between the parties concerning commission compensation and supersedes all prior agreements on this subject.

Severability: If any provision is found invalid or unenforceable, the remaining provisions shall continue in full force and effect.

Amendment: This Agreement may only be amended in writing signed by both parties.

Counterparts: This Agreement may be executed in counterparts, each of which shall be deemed an original.

18. SIGNATURES

By signing below, both parties acknowledge they have read, understand, and agree to the terms of this Agreement.

EMPLOYER

Signature: [________________________________]
Printed Name: [________________________________]
Title: [________________________________]
Date: [__/__/____]

EMPLOYEE

Signature: [________________________________]
Printed Name: [________________________________]
Date: [__/__/____]

SOURCES AND REFERENCES

• RCW 49.48 — Wages — Payment — Collection
• RCW 49.48.160 — Sales Representatives — Written Contract Requirement
• RCW 49.52.050 — Willful Withholding of Wages
• RCW 49.62 — Non-Competition Covenants